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What Is Permanent Life Insurance?

Life Insurance
mother and daughter read a book in her bedroom as mom considers buying permanent life insurance

Are you dipping your toes into the life insurance pool? Choosing to purchase life insurance is a big step — one that could provide your loved ones with lasting financial security for tomorrow. Of course, there are many options available. How do you find the right one for you? Exploring the available policy types could help you finally take the plunge.

Permanent life insurance policies are one popular option because they are designed to grow with you. Intrigued? Take a deeper dive into permanent life and learn more about the available options, how they work and when they could make sense.

What Is Permanent Life Insurance?

Permanent life insurance is designed to last your entire life. As long as you pay your premiums, your coverage stays in force. With permanent life insurance, you don't have to worry about your coverage ending. Some permanent life insurance policies also build cash value, which is money you could borrow against while you're still alive. However, loans and withdrawals are subject to interest and will reduce the cash value and benefit (and may cause the policy to lapse). Also, the life insurance company invests your money so it could grow over time.

Whole life insurance is the oldest and most straightforward version of permanent life insurance. The premiums on these policies never go up and stay the same as when you first bought your policy. The cash value grows at a guaranteed fixed rate, meaning you know how much you'll earn every year ahead of time.

Universal life insurance is another permanent life insurance option. Universal policies let you change your insurance premium so that some months you can pay more than others. Note that you may also need to consider paying enough into the policy to keep up with the insurance costs or your policy could expire. Your cash value growth is based on market interest rates, so the amount you earn could change every year. Universal life policies generally have a little more risk than whole life policies, but universal life policies are often more flexible. 

Is Permanent Life Insurance Right for You?

Permanent life insurance could make sense for insurance goals that never end. One example? You could allocate funds to pay for your final expenses. In the end, this is a need we all share. A permanent life insurance policy will help cover these costs — whether you live another 20 years or 100 years. Permanent life insurance could also help you leave an inheritance for your loved ones or give a donation to charity.

Let's imagine that you bought a large term life insurance policy when your kids were young, but now it's about to expire. You could decide to buy a permanent policy. Depending on the amount you choose, it could be enough to cover your final expenses and leave a small inheritance for your children. Then, once your permanent policy is in place, your life insurance coverage will remain set for life, as long as you pay the premiums.

For younger people, permanent life insurance could help you lock in a low rate for the rest of your life. The cash value also builds for the future. You could borrow against the cash value to make a down payment on a house, pay for college expenses for your future children and more.

Are you looking for ways to prepare for the future? If you don't have children, but plan to start a family someday, permanent life insurance could be a good fit — as the policy would remain in place as your children grow, as long as you pay the premiums.

If you want a long-term solution for your insurance, permanent life insurance could be a good fit for your needs. Getting your feet wet in the world of life insurance might feel a little intimidating, but jumping in (and learning more about the ins and outs of each insurance type) could help you finally learn how to swim.

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Information provided is general and educational in nature. It is not intended to be, and should not be construed as, legal or tax advice. Western & Southern Financial Group and its member companies (“the Company”) does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. Consult an attorney or tax advisor regarding your specific legal or tax situation.